France is determined to support debt-ridden Greece, French Budget Minister François Baroin (pictured) has said, as uncertainty over any "bail out" package caused jitters on international markets.
Paris scrambled Thursday to voice its support for debt-ridden Greece and to insist France’s credit rating was not at risk of being downgraded.
French Budget Minister François Baroin told RTL radio that France, along with all eurozone countries, was determined to help stabilise Greece.
"There is no doubt over the determination of the eurozone, of the European Central Bank, the IMF and the European Union to ensure the stability of Greece and therefore the stability of our currency," he said.
On an official visit to China, French president Nicolas Sarkozy also said France was “fully determined” to support both Greece and the euro.
Greece’s credit rating was downgraded to “junk” by ratings agency Standard & Poor’s on Tuesday, while Portugal’s ratings were slashed and Spain’s downgraded from AAA+ to AA.
While there is broad consensus in Europe that Athens needs to be “bailed out” (a 120 billion euro package is on the table), Germany insists that Greece implement radical reforms of its public finances before it will approve any financial aid.
Germany’s Chancellor Angela Merkel, backed by public opinion, is hostile to using German money to recue Greece from its own profligacy.
Euro area ‘at stake’
But Merkel apparently eased her stance after talks in Berlin with International Monetary Fund (IMF) chief Dominique Strauss-Kahn and European Central Bank president Jean-Claude Trichet.
The IMF chief warned that confidence in the entire 16-nation euro area was now “at stake”, while Greek Prime Minister George Papandreou said the EU “must prevent a fire” from engulfing the European and world economy.
“It is perfectly clear that the negotiations with the Greek government, the European Commission and the IMF need to be accelerated,” Merkel said after meeting with Strauss-Kahn.
"We hope they can be wrapped up in the coming days and on the basis of this, Germany will make its decisions," she told reporters.
Uncertainty on the markets
Continued uncertainty over when, how, and by how much Greece will be “bailed out” has caused panic on international markets, uncertain over the future health of the euro.
François Baroin warned that speculators attacking Greece were in fact attacking the entire eurozone.
"Behind Greece, it's the entire eurozone that's being attacked,” he said. “It's our currency, our economy, our companies, our jobs," he said.
France still enjoys the highest AAA debt rating despite a growing deficit. Baroin told RTL radio that it remains a "signature refuge" for lenders seeking a safe government client.
“There's no risk of seeing our rating lowered,” he said, amid fears that the debt crisis in the Mediterranean could spread to other economies in the euro bloc.
Eurozone leaders are due to meet on May 10 or 11 for an extraordinary summit to decide how much financial aid, and under what conditions, to commit to Greece, which needs 85 billion euros by May 19 if it is to avoid a default.
Date created : 2010-04-29